Litigation lawyers in the firing line

Litigation lawyers are looking over their shoulders after a spate of cases in London courts. David Corker reviews the situation.

Litigation lawyers are in the firing line Joe Belanger

Recent developments should give rise to concern lawyers specialising in civil and criminal litigation. Such lawyers of course act for and advise clients embroiled in hostilities either initiated by them or in reaction to them. The parties may be at daggers drawn and the litigious process may only exacerbate their antagonism. Occasionally this poses a particular professional problem for a lawyer acting for one of the litigants who may now become embroiled in a complaint by an opposing litigant who alleges professional impropriety. The gist of such an imputation is normally that the lawyer either compromised their independence or competence in order to please their client, or acted in such an unreasonable way so as to cause unnecessary expense.

The wasted costs jurisdiction allows an opposing party to apply for an order against the other party’s lawyer and is designed especially to penalise a lawyer who breaches their duty to the court. The courts however have, in a line of authorities, emphasised the exceptional and sparing use of such a sanction so that it is reserved only for cases of the clearest malpractice.

Litigation against lawyers

But in the past few months there have been four instances of an opposing party initiating litigation against the lawyers for the other side for the purpose of obtaining a penal order against them. Two concern wasted costs applications, one an application to have the solicitors struck off and the fourth, to have a costs order made on the basis that the solicitors (not the client) were the applicant of an unsuccessful application.

The two wasted costs applications both arise as fallout from the Serious Fraud Office’s failed prosecution of a defendant, Victor Dahdaleh. The SFO is claiming that Mr Dahdaleh’s former solicitors, Allen and Overy, should pay a substantial sum to it in relation to the alleged misconduct in their dealings with a prosecution witness. Mr Dahdaleh in turn has made an application against a US law firm, Akin Gump, for its alleged misconduct during its investigation of him which led to his prosecution.

Thus Southwark Crown Court has become the forum for two applications in which major law firms are targeted. So the trial judge now has to preside over satellite litigation which will not only be as complex as the original trial but will probably be more heated. Finality seems a distant goal.

The third instance is the proceedings before the Solicitors Disciplinary Tribunal (SDT) which were brought not by the regulator, the Solicitors Regulation Authority (SRA), but by an individual who had been the adversary in proceedings brought by clients of the two defendant solicitors’ firm. The solicitors, a partner and assistant, conducted their clients’ litigation and the complainant decided to turn the tables on these solicitors via the avenue of disciplinary proceedings. He succeeded. At the end of a bitterly fought hearing, the tribunal ruled that both solicitors had acted dishonestly during the litigation and they were struck off. This remarkable saga has come to light as the solicitors appealed the decision and a rehearing has been ordered. See Shaw v Logue [2014] EWHC 5.

The final one is the judgment of the Admin Court in DLA Piper, the major firm of City solicitors, v BDO, a major firm of accountants, [2013] EWHC 3970. This case relates to whether a solicitor acting for an applicant can be found personally liable to pay the costs of the respondent following the court’s refusal to grant an application to issue a witness summons against the respondent. There was no allegation of misconduct levelled at DLA by BDO; it sought a costs order based on a contention that DLA (not its client) was the applicant and so was liable. The possibility that a firm of litigation solicitors, despite acting properly for a client in advancing their interests, could nonetheless end up being held liable to pay a huge costs order is something which should be of great concern. Fortunately the Court quashed the order holding there was no power to make an order against DLA in the absence of a finding of misconduct.

The beginning of a trend?

Presently it is unclear whether these instances are isolated ‘straws in the wind’ whose occurrence is coincidental or whether they are harbingers of an era where lawyers will be more likely to be drawn into the firing line. It would be premature to contend on the basis of these cases there the risks for a litigation lawyer have significantly increased. However litigants are clearly thinking more about taking the fire to the opposing lawyer if there appears to be cause and that this may be an effective way of it fully redeeming its reputation.